On 1st March 2019, the Select Committee on Finance invited Stakeholders and interested parties to submit written comments on the South African Carbon Tax Bill to be presented before the National Council of Provinces (NCOP) today, 12th March 2019. This was following the majority vote in Parliament in favour of the Bill on 19th February 2019. 
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During the public hearing today, Tuesday 12th of March, in the old assembly in Cape Town, there were several submissions from industry associations, the business community as well as non-profit organisations. According to EcoMetrix Africa consultant, Thapelo Tladi, who closely followed the proceedings, tough opposition from stakeholder affected by the tax remains persistent. Most of the submissions however reiterated concerns already raised during prior stakeholder consultations. Overall most of the comments dealt with the anticipated social and economic impacts of the tax and practical matters concerning its implementation, including but not limited to the following: 
• The impact of the tax on electricity prices and how this would eventually lead to increased cost of doing business in South Africa 
• The promulgation of the Customs and Excise Amendment Bill which is required for the Carbon Tax bill to take effect 
• The alignment of the Carbon Tax with the Carbon Budget system as part of the Post-2020 Mitigation System and other climate change policies still in draft form or not yet formulated 
• The state of readiness of government institutions to implement, develop and monitor the impact of the tax was questioned with regards to emissions baseline data and costs of administration of the tax to the tax payers, among others 
• Ringfencing of carbon tax revenue and recycling to environmental programmes 

National Treasury and the Department of Environmental Affairs present during the public hearing responded to the submissions affirming that the current Bill was the result of an extensive stakeholder consultation process and that during this process issues raised were already addressed, making concessions and changes while going along. Nevertheless, various comments were responded to, again, during the hearing today. 

​Following the hearing, the NCOP will draw up a report with recommendations to be discussed next week at a plenary session, after which a vote on the bill will be made. If the council passes the bill as is, it will be submitted to the president for assent. However, If the NCOP passes the bill subject to amendments or rejects the bill, it will be sent back to the National Assembly which must reconsider the Bill, taking into account any amendment proposed by the Council. In case of the latter, further delays with implementation of the bill should be anticipated. 
Thapelo Tladi, consultant at EcoMetrix Africa comments that “the submissions made today regarding the Carbon Tax by various parties who will be directly or indirectly affected by the environmental levy is reflective of how complex the process to develop this bill has been. By all accounts many of the issues raised today are not new but nonetheless remain pertinent issues that business, NGOs, labour and industry associations require clarity on. However, the extent to which the issues raised would necessitate an amendment of the Bill remains to be seen, which will invariably have implications on when the bill is officially signed into law". 
For further information, please contact 
Mr Henk Sa 
Partner at EcoMetrix Africa T +27 78 459 5748 E henk.sa@ecometrix.net 
Mr Lodewijk Nell 
Partner at EcoMetrix Africa T +27 78 704 2678 E lodewijk.nell@ecometrix.net 

Reducing carbon emissions is increasingly becoming a business imperative. The introduction of tax incentives and the possibility of a carbon tax on the horizon make reducing greenhouse gas emissions good business sense, according to Dom Chennells.

With a view to enabling South Africa to meet its commitments in term of the Paris Agreement on Climate Change and reduce greenhouse gas emissions, the government has touted the introduction of a Carbon Tax from next January.

“But, if companies focus on the ‘carrot’ rather than the ‘stick’, they will truly be able to appreciate the benefits of implementing carbon-reducing energy solutions such as solar power,” explains Dom Chennells, CFO of SOLA Future Energy.

“Cost drivers for many businesses are likely to be the ones that produce the most greenhouse gases, such as fossil-fuel generated electricity, business travel, and waste disposal,” he points out.

Chennells adds that supplementing a business’ energy mix with a solar photovoltaic (PV) system is a cost-effective way to reduce operating costs and carbon emissions in the long run.

​Source............

South African industries breathed a sigh of relief on Wednesday as treasury decided to delay the implementation of the proposed carbon tax to 2016.

According to the treasury, this was in order to align the design of the carbon tax to desired emissions reductions outcomes being developed by the department of environmental affairs. Following extensive public consultation on the proposed tax during 2013, a number of adjustments to the policy proposal would also be made, the treasury said in its 2014 Budget Review.  Read more...

South African banking group Nedbank, in partnership with the Sustainability Institute (Stellenbosch University) has launched a practical book aimed at advancing the control, minimisation and measurement of carbon footprints in the country. With the South African National Treasury proposing the phasing-in of a domestic carbon tax from in early 2015, this book explores how South African companies can monitor their tax compliance by calculating their own carbon footprint ahead of the introduction of this new tax legislation.

The book “Carbon footprinting: A practical calculation guide focusing on measuring, monitoring, reporting and verification” will provide a guide for companies and other organisations to better understand their carbon impact and then implement effective carbon reduction programmes throughout their operations and activities.

The book will assist readers to be:

• Better placed to reduce operational expenditures associated with the use of energy.
• Better geared for the looming domestic and international financial penalties that will be associated with Green House Gases (GHG) pollution.
• Able to make informed operational choices.
• Able to think strategically about developing products and services for an increasingly complex world with environmental limitations.

“We have partnered with Nedbank to create what we believe is a valuable addition to the knowledge that currently exists on carbon footprinting in the South African context, that we intend to share with many other academic institutions in the near future. We fully endorse it as a useful contribution to the sustainability debate,” Alan Brent, professor and associate director at the Sustainability Institute and co-author of the guide, says.

Despite numerous reputable sources of information freely available on internet relating to climate change and carbon footprinting, Nedbank and the Sustainability Institute firmly believe there is a need for such content. “The sources that currently exist are geared towards people who are already experts of carbon. This book is not. It takes the reader by the hand and explains in a step-by-step manner the nuances of carbon calculations by using day-to-day examples and investigates the challenges faced in the South African GHG reporting context in a conversational style,” says Dr Marco Lotz, co-author of the book and Nedbank sustainability carbon specialist.

The first section of the book consists of the conversational theory by example “how to” that explains international conventions and local applications of carbon footprinting. The second section consists of a selection of case studies. The reader is exposed to real carbon footprint case studies and Green House Gas (GHG) information of predominantly South African companies. Nedbank’s intention is that the book be distributed free of charge, in both hard copy and as a downloadable file.

CARBON TAX ? The 2013 Budget Review of South Africa states:
“With effect from 1 January 2015, a carbon tax at a rate of R120 per ton of CO2 equivalent is proposed, with the rate increasing at 10 per cent a year during the first phase of implementation...During the first phase of implementation (between 2015 and 2020), a basic tax-free threshold of 60 per cent is proposed, as well as offset percentages of 5-10 percent”

The Promethium Corporate Carbon Footprint Tool is your first step in knowing your carbon footprint in order to assess your tax liability.VISIT www.promethium.co.za

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• It’s your first step in understanding your carbon tax liability.
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“As one of the biggest emitters of greenhouse gasses in the world,
South Africa has to do something. By 2015 countries with carbon pricing policies will account for three-quarters of the world’s GDP.” Robbie Louw

FREE DOWNLOAD www.carbontax.co.za

There are only five weeks left to contribute to National Treasury’s call for public comment on the updated Carbon Tax Policy Paper, Reducing greenhouse gas emissions and facilitating the transition to a green economy. This is the second and final round of comments requested on carbon tax policy, before the legislation is finally promulgated; with Carbon Taxes to be effective during 2015.

According to a media statement by the National Treasury in May, “The primary objective of implementing carbon taxes is to change future behaviour, rather than to raise revenue. The Policy Document therefore prescribes a relatively low carbon price at the beginning, which will then progressively rise after five to ten years and beyond. This approach provides industry and other major emitters sufficient time to innovate and invest in greener technologies for the future.”

It is envisaged that the introduction of carbon taxes will drive both consumption and production behaviour towards being “low carbon and more energy efficient”.  The Paper outlines three main benefits of introducing the Carbon Tax and its intended outcomes:

1. A carbon tax will alter the relative price of goods and services based on their emissions intensity and encourage the uptake of low carbon alternatives by making them more cost effective. Should low carbon measures not be introduced, producers will have to pay for their emissions. This will ultimately expose final consumers to higher prices for goods and services as manufacturers will transfer the higher production costs along the value chain.
2. A carbon price will create a dynamic incentive for research, development and technological innovation in low carbon alternatives. It will help to reduce the price gap between conventional, carbon intensive technologies and new low carbon alternatives.
3. Carbon intensive factors of production, products and services “are likely to be replaced with low carbon emitting alternatives”.

Changing production

Two main options are available to South Africa in order to comply with the extent of emission reductions committed to in Copenhagen in 2009: Production technologies will need to become less carbon intensive and/or the consumption of certain carbon intensive products such as cement, steel, and aluminium will need to be reduced.

The latter is not a viable option – reducing production in these areas will affect thousands of jobs, have a negative economic impact and hamper government’s infrastructure development plan.

This last point sums up the motivation behind the work of the Industrial Energy Efficiency Project through the UNIDO methodologies and the support of the NCPC-SA.  Industry must address the way it produces, embracing concepts such as cleaner production and industrial energy efficiency.

Energy Efficiency Tax Rebates

One of the basic principles of the Policy Paper is that the carbon tax can and should be instituted in such a way as to reduce carbon emissions whist having a limited negative macroeconomic impact. This will largely be achieved through “revenue recycling”. Since revenue generation is not the main objective of the tax, the income gained through the carbon tax will be ‘recycled’ or better re-invested in the form of incentives addressed to industry for the further uptake of environmentally sound alternatives.

The Energy Efficiency Tax Incentive will play a major role in this ‘revenue recycling’ process and will assist the implementation of energy efficiency interventions. The incentive scheme will give tax rebates to companies implementing energy efficiency interventions. This will not only help reduce the payback period of the interventions, but will ensure a rebate to off-set the carbon tax.  According to the statement issued by National Treasury, the gazetting of the regulations that will provide guidelines for the implementation of the energy efficiency tax incentive is imminent.

The bottom line

An initial carbon tax rate of R120 per ton of CO2 equivalentproduced will be applied, with a 10 per cent annual increase, during the first phase of implementation (January 2015 to December 2019). However, an across the board basic 60 per cent tax-free threshold is proposed for process emissions of trade-exposed sectors, below which the tax will not be payable. There will be additional relief for certain sectors and offsets could be used by firms to reduce their carbon tax liability.  Emissions from the agricultural and waste sectors will be exempt during the first phase.

A revised carbon tax regime with lower tax-free thresholds and a revised tax rate will be announced in February 2019 and it is expected to be implemented as of on 1 January 2020.

With the planned implementation date for carbon tax less than two years away; switching to a more resource and energy efficient production chain, gains not only environmental significance but it becomes a real business priority to ensure market competitiveness and overcome international trade barriers.

To read the full statement by National Treasury click here

To download the Policy Paper click here 

Related article:

Carbon tax will not be implemented if not ready – Treasury official (Engineering News 18 June 2013)


Source....

• 2012 and 2013 Budget noted the current carbon tax proposal, and
indicated a discussion paper will be released to elaborate the proposal
• 2006 and 2010 Discussion documents released by National Treasury
– 2006 Environmental Fiscal Reform Policy Paper
– 2010 “Reducing Greenhouse Gas Emissions: The Carbon Tax
Option”
• This May 2013 paper updates the 2010 paper, and is now a Carbon Tax
Policy Paper
• It is the second and final policy paper on carbon tax requesting public
comment, before NT releases draft legislation to implement the carbon
tax from 1 January 2015
• Public comments to be submitted by 2 August 2013

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